Corresponding author. . E-mails: beneditocosta50@gmail.com
This paper aims to assess
the degree of comprehensiveness of
Este trabajo tiene como objetivo evaluar el grado de exhaustividad
de los informes de
O objetivo deste trabalho é avaliar
o nível de abrangência dos relatórios de
Corporate social responsibility (CSR) notions allude to the companies’ abilities to respond to the expectations of a broad spectrum of stakeholders that present different demands. Several organizations, however, have been promoting CSR actions aiming to respond to these demands, in order to obtain competitive advantage (
CSR information reports aim to transmit social, political, and economic meaning, showing to society the organizations’ concern with social issues; strengthening the relationship between the organizations and their stakeholders; helping to mitigate conflicts, as well as to legitimate the organizations’ activities (
A
In Brazil, studies about CSR information disclosure focus mainly on the analysis of the disclosed information volume (
This work aims to appraise the level of comprehensiveness in CSR reports of Brazilian companies. For such approach, the degree of comprehensiveness of the reports was evaluated considering the three types of information and its correspondence with each item disclosed: vision and objectives; management actions; and performance indicators. This analysis aims to capture the comprehensiveness, or completeness, of the reports regarding information meaning and its accountability to stakeholders.
Results reveal that, although it is still low, in average there has been an advance in the comprehensiveness of CSR information disclosed by the Brazilian companies. Companies that have been putting substantial effort in the pursuit of more disclosure of their CSR concerns and sustainability –proxied by their presence in the ISE (
Distinct proposals for CSR reports, that have appeared recently, aim to enhance the communication between company and society by disclosing CSR actions. Internationally, initiatives such as the model proposed by the United Nations via Global Compact; the AccountAbility’s AA1000series, and the model proposed by the Global Reporting Initiative (GRI) can be mentioned (
Literature suggests that companies disclose CSR information for various reasons. On the one hand, they may seek to legitimize their activities by displaying a positive image to a broad spectrum of stakeholders (
Regardless of the companies’ CSR disclosure report motivation or its format, it is important that it provides a release able to meet the information demands of their diverse stakeholders. In fact, the CSR report must transmit a good notion of the social and environmental impacts of each company’s activities, both when such impacts are positive and negative (
In this context, there has been a complaint that CSR reports tend to prioritize the disclosing of content regarding the companies’ objectives and intentions, leaving in a second place the publication of actions effectively carried out (
Regarding the report’s comprehensiveness, the argument is that, in order to show effective CSR accountability, the information contained in the report must present a clear declaration of values, with their corresponding objectives, goals to be achieved, and report of progresses achieved (
Some works started to examine the potential of the CSR reports as the means for disclosing social responsibility activities or actions that were executed by organizations. Examples of researches in this field are the ones that were conducted in the United Kingdom (
An international research developed by KPMG about corporate reports shows that about 93% of the 250 largest companies in the world disclose reports of this nature and that there is also a tendency to conduct external auditing of these reports. In Brazil, the percentage of CSR reports submitted to external evaluation is 56%, while the global average is 38% (
The evolution of the quality and comprehensiveness of the information disclosed in CSR reports of Brazilian companies might not follow a linear path in accordance to the quantity of information disclosed. However, it is pertinent the proposition that the growth in the number of reports with good compliance to quality standards, such as the GRI guidelines and the external auditing of reports, are factors that strongly contribute to the quality and comprehensiveness of the disclosed information. This information makes for the proposition of a hypothesis about the evolution of the comprehensiveness degree of CSR reports in Brazilian companies.
Companies with a higher degree of concern with CSR and sustainability actions tend to give more importance to reports that disclose information of this nature, as a way to be more transparent and pursue image and reputation gains, as well as legitimacy of their activities (
Market indices have been proposed to evaluate the degree of the firms’ concern with CSR and sustainability actions, such as the Dow Jones Sustainability Index (DJSI) of New York (USA); the FTSE4 Good of London (United Kingdom), and the JSE Socially Responsible Investment (SRI) Index of Johannesburg (South Africa) (
The rationale is that companies that compose these indices would have a higher CSR and sustainability disclosure standard because of the competitive process that they go through in order to be members of the sustainability index in a certain year, and because of the higher degree of visibility they consequently have by composing the index. The proposal is that the ISE participation amplifies the market knowledge of each company commitment to sustainable development, equity, transparency, and accountability (
This line of thought suggests that companies that integrate the ISE index manifest more concern with the valorization of their institutional image and, in consequence, disclose CSR information in a more complete and comprehensive fashion, as formulated in hypothesis 2.
The literature has suggested that firm ownership structure might have effects on the conflicts of interests that appear between each company’s main stakeholders –shareholder, manager, and creditor–. For instance, there are results that indicate the influence of the ownership structure on the companies’ value and performance (
Besides the pressure from society for company social responsibility, owners and managers have started to contemplate the possibility of CSR being an important tool of legitimacy, as well as a source of improvement for each company’s image and reputation; all of which would be a motivating factor to carry out projects such as those that are proposed as able to create value (
In Brazil, the strength of the main shareholder stands out as able to influence on company’s policies. The interest in company legitimacy as well as improvement of reputation and image is very much associated with the identity of the main shareholder, and this situation can make them prioritize CSR and its respective disclosure. It is intuitive to suggest that more social and sustainability actions for the company, motivated by a pursuit of legitimacy and reputation gain, may conduct to a higher disclosure degree on these actions, which would be associated to a broader comprehensiveness of the CSR and sustainability reports, as proposed in the following hypothesis.
Society’s growing concern with environmental issues has put pressure on firm management so that, as an area of study, it brings awareness of these issues; and such management concern may also lead to improve other aspects of social responsibility. Environmentally sensitive sectors of the economy are those that involve a higher risk of environmental impact and, as such, are more susceptible to criticism and penalties regarding their activities (
In Brazil, the Law 10165 of 2000, which deals with the National Environmental Policy, classified in its annex VIII the economic activities according to industry propensity to have environmental impact in three levels: low, medium, and high environmental impact potential. There are areas of the economic trade that are not classified in either of these levels. Previous studies noted that companies of more environmentally sensitive areas disclosed more social and/or environmental information, probably due to the higher visibility that these companies now have, and the need for adapting to more rigorous requirement standards concerning the relation with the natural environment (
From this discussion, it is plausible to propose that reports containing CSR information disclosed by companies from riskier industries would be more comprehensive than those of other companies with lesser potential for environmental impact, as expressed in the following hypothesis.
The Stakeholder theoretical framework proposes that there is a virtuous cycle between CSR and company performance, under the argument that CSR actions are able to create value to the company, since society has a positive sensibility for this type of corporative action (
Firm bigger size has been suggested as favorable for the CSR policy due to the higher availability of resources implied, either by infrastructure or money, for the execution of social policy. Furthermore, as the company grows, it gathers more visibility and interacts with a broader group of stakeholders, facing a greater demand for CSR, as well as for disclosure of these actions, which are of interest since they will contribute to improve its reputation and pursuit of legitimacy (
The data was analyzed through a qualitative and a quantitative approach. Initially, GRI reports were qualitatively analyzed. Then, a quantitative analysis was conducted, including a detailed description of the sample and the measurements used. After that, tests for the difference in means on the degree of comprehensiveness on CSR reports were run, and econometric models were estimated in order to assess the drivers for their degree of comprehensiveness on CSR reports.
In order to obtain an indication of CSR items disclosed by companies and the comprehensiveness of the information that accompanied each item –declared in terms of vision and objectives, management approach, and performance indicators– the content analysis table developed by
Content analysis technique requires a coding structure based in precise rules about information, representative of the content analysis characteristics, reliable and that facilitates the interpretation of the data (
Note: VO = vision and objectives;
MA = management approach; PI = performance indicators
Content analysis requires the selection of a
In order to verify the presence of an item and the type of information revealed by it in the report reading, the identification code was initially searched in the GRI Content Index (for instance, “EC1,” “EN26,” “SO1”). In those instances, when the reports did not present the GRI summary, phrase structures and key terms were used (for instance, “local suppliers,” “health and safety,” “organizational environment,” “human rights”) to locate items in them.
The verification that an item identified in the reports contemplated VO (vision and objectives) type of information, was conducted using key terms or words that denote intention, policies, values, or objectives of the company in the CSR context, such as: “The correct residue management is a
Finally, information about PI (performance indicators) corresponded to the data expressed in quantitative (absolute, relative, graphic) or qualitative values that indicated progresses or deficiencies on each company’s CSR performance. As examples of PI information, we can mention: “During the year, no accidents with our own collaborators were registered;” “In 2013, we had our lowest turnover index of the past three years – 7.8%, with 9% in 2012;” “The supplier expense percentage of the surroundings in relation to the total supplier expenses was: 2011 – 3.8%, 2012 – 4.0%, 2013 – 4.9%.”
Information obtained in the content analysis served as the basis for the construction of two metrics to measure the degree of comprehensiveness of the reports (IDCR), that aim to reveal the extension to which a company discloses the types of information for the items reported. In order to evaluate the degree of comprehensiveness, or completeness, of CSR reports disclosed by Belgian companies,
This work uses two metrics to measure the degree of comprehensiveness of CSR reports: the index proposed by
The index proposed by
The Index for the Degree of Comprehensiveness of the Report (IDCR1) defined by this metric reveals the measure in which a company discloses all three types of information for the items it reports. This way, if a company discloses only one CSR item, and about this one item all three types of information are disclosed, the degree of comprehensiveness of the report will be 1.0. The same way, if a company reveals the totality of items considered, and all of them contemplate the three types of information, the degree of comprehensiveness of the report will also be 1.0. On the other hand, a company might publish information for a huge number of items without this reflecting in the degree of comprehensiveness of the report, if the disclosed items do not simultaneously contemplate the three types of information.
Considering that the simultaneous disclosure of two types of information is already able to transmit a certain degree of information (
In
In order to contrast the research hypotheses, tests for the difference in
means were executed according to the degree of comprehensiveness of the reports.
Mainly, econometric models were estimated, in which the degree of comprehensiveness
of the reports (IDCR1 and IDCR2) is the dependent variable. The estimated models
are based on
In
The sample used is composed by 265 annual
observations from 98 companies listed in BM&FBovespa
that published social responsibility reports according to the GRI guidelines in
the period from 2010 to 2013. Companies whose CSR reports were available for download
in the GRI website until June 31st, 2015, were included in the sample.
The sample comprises an ample range of firm industries, which is important in such
studies (
The option for companies listed in the stock exchange was made because public
companies have the ownership structure as a more relevant aspect. Besides, these
companies tend to adopt broader and more comprehensive information disclosure policies
in order to pursue reductions of informative asymmetry (
The
It can be noticed from graphic 1 that the proportion of CSR items covered by information of three types (VO, MA and PI) had relevant and consistent growth during the analyzed period, in contrast to the decline, or maintenance, of items that present only one or two types of information. This denotes a trend of improvement in the comprehensiveness degree of CSR reports. Such evaluation is deepened using the comprehensiveness indices (IDCR1 and IDCR2).
The higher proportion of items in some dimensions previously observed in
test F for the difference in means among GRI sustainability dimensions
(Anova)
Data exhibited in
test F for the difference in means among the years (Anova)
In addition to the annual comparison, the degree of comprehensiveness of
the reports was also compared between periods of two years using the t-test. The
results confirm the superiority of the average index of comprehensiveness in more
recent periods (
t-test for the difference in means
Results exhibited in tables 6 and 7 support the proposition of hypothesis
1, that the degree of comprehensiveness of the CSR information disclosed by Brazilian
companies has evolved throughout the years. This means that companies have developed
in the direction of improvement of the quality of the information disclosed in their
CSR reports. More than a natural evolution of the CSR disclosure process, it is
possible that the aforementioned BM&FBovespa bulletin
According to the hypotheses proposed, it was suggested that some firm attributes
might interfere in the degree of comprehensiveness of the CSR report: company presence
in the ISE index, existence of a major shareholder, high risk firm industry as established
by the Law 10165 of 2000, as well as firm profitability and size.
t-test for the difference in means
A comparative analysis of the average degree of comprehensiveness in CSR
reports between companies with and without a major shareholder shows that this degree
is higher for companies that have one major shareholder by both metrics used (
T-test for the difference in means
t test for the difference in means
The analysis
of the specific index for the degree of comprehensiveness for the environmental
issue –i.e., an index that considers the comprehensiveness of the report
taking into account only the environment sustainability dimension– was done to deepen
this analysis. Results shown in
T-test for the difference in means
In this same line of argumentation about the objective, the ownership concentration held by the main shareholder is another attribute of the company that contributes to increase the degree of comprehensiveness of CSR reports, as proposed by hypothesis 2. This positive effect is observed with the use of the two proxies proposed, which are: the presence of a major shareholder (D_MAJOR) (
As foreseen in hypothesis 4, the fact that the company is considered potentially aggressive to the environment according to the Brazilian environmental law (D_AMB) contributes positively for a higher degree of comprehensiveness in CSR reports. The fact that the firm is listed as a high environment risk company according to its sector actually seems to be a factor that stimulates –or even forces– the company to present CSR reports with a higher degree of comprehensiveness.
Also, as theoretically foreseen, firm size and profitability of the company has a positive influence on the comprehensiveness degree of CSR reports.
models estimated by
This study made an analysis of the comprehensiveness of CSR information disclosed by Brazilian companies, based on social responsibility reports that follow the GRI guidelines for sustainability reports. The work defined
The research used 265 annual reports of corporative social responsibility, elaborated according to GRI guidelines, from 98 Brazilian companies listed in BM&FBovespa during the period from 2010 to 2013. Results show that, in fact, there are firm attributes that interfere in the degree of comprehensiveness of CSR reports of Brazilian companies. Besides that, it was also noted a significant evolution in the degree of comprehensiveness of CSR reports. The evolution in the comprehensiveness degree of CSR reports of Brazilian companies was observed by verifying a degree of comprehensiveness significantly higher in more recent periods.
Despite the progress in the degree of comprehensiveness of CSR reports, it is clear that there is still a low comprehensiveness degree in CSR reports in Brazil. The measurement of the degree of comprehensiveness takes into account vision and objectives (VO), management approach (MA), and performance indicators (PI). It is observed that companies tend to report more information regarding the execution of effective actions of social performance, as
About the firm attributes that influence the degree of comprehensiveness of CSR reports, there are in fact company attributes that matter in this context. As suggested, there is evidence that companies more concerned with sustainability –here included environmental, social, and management aspects, brought together by their presence in the ISE– present a higher degree of comprehensiveness in CSR reports. Companies that compose the ISE index, in fact, fill many requirements associated to its social and sustainability concerns. Companies with such traits tend to elaborate better CSR reports that will, therefore, be more comprehensive and complete. This attention to CSR reports might have a positive effect on the legitimacy of firm activities, as well as on firm reputation and image.
Ownership concentration in hands of the main shareholder is also another company attribute that contributes to increase the degree of comprehensiveness of CSR reports. This positive effect of ownership concentration on the quality of CSR disclosure possibly comes from the controlling shareholder’s influence on the company’s policies, and his/her interest in the legitimacy and the improvement of the firm image that, in Brazil, is very much associated with the reputation of the shareholder himself/herself. It is possible to suggest that the firm social and sustainability action, motivated by the search for legitimacy and gain of reputation, leads to extensive sustainability disclosure of these actions in companies with highly concentrated ownership in hands of the main shareholder, resulting in a higher degree of comprehensiveness of CSR reports.
It is also important to report that companies from industries considered to have higher environmental impact present, according to the Law 10165 of 2000, a higher level of comprehensiveness in the disclosure of information on the specific environmental sustainability dimension. Although the Law 10165 of 2000 does not mention disclosing of social information, the fact that it lists a group of firm industries more potentially aggressive to the environment might motivate these companies to have more effective environmental concerns, as the literature has suggested. In this sense, this possible enforcement might also have an effect in the quality of CSR reports that, this way, tend to be more comprehensive, or complete, in the disclosure of information concerning environmental aspects.
Results obtained with this work amplify the knowledge about the voluntary disclosure of CSR information, since it assesses the disclosure of a group of companies that follow GRI guidelines, which nowadays constitute the main reference for disclosure in the field of corporative social responsibility in Brazil. The work also contributes to the criticism of CSR reports, adding empirical evidence for the quality of disclosed information and, still, for the advancement of studies related to the disclosure of CSR actions, by identifying types of information that might better describe the social operation practices and the assessment of results of these actions, in view of the efficacy of communication with the stakeholders.
(cont.)
(cont.)